HM Treasury News Release

126/98                                            30 July 1998
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            PLANS TO MODERNISE FINANCIAL REGULATION
                                
         Financial Services and Markets Bill Published

Proposals to modernise and simplify the structure of the UK's
financial regulatory structure were published today by the Chief
Secretary, Stephen Byers.

Under the draft Financial Services and Markets Bill the Financial
Services Authority (FSA) will become the single regulator for the
UK's financial services industry, backed by law. 

Publishing the Bill, Mr Byers said:

     "This bill will allow the creation of a financial regulatory
      system that is independent, flexible and accountable to those
      regulated by it and to the consumers that it protects.

     "A single regulator will remove the scope for duplication, gaps
      and inconsistency that affects the current system. 

     "In the light of the personal pension mis-selling scandal we
      also want to see an improvement in standards so that customers
      are better protected and better informed about the products 
      they buy. 

     "Financial services is an important and internationally
      competitive sector of the economy. These reforms are the
      opportunity to apply best practice across the board and to 
      shape a financial regulator that will maintain confidence in
      UK markets at home and abroad, setting an example for 
      financial regulation around the world.

     "We have consulted widely in putting this draft bill together
      and we are now delivering on our commitment to publish it in 
      the summer.  There will now be a further period of public
      consultation on the detail of the draft Bill.  I also 
      anticipate - and welcome - the involvement of the Treasury 
      Select Committee in the consultation process.  This 
      consultation is an important part of the process to ensure that
      the new system is efficient and effective. We want to lay the 
      foundations of a regulatory system that will last well into 
      the 21st century."

The main features of the Bill include:

     new statutory objectives for the FSA to improve transparency and
     accountability. The FSA will be required to report annually on
     its achievements against the objectives of market confidence,
     public awareness, the protection of consumers and the reduction
     of financial crime.

     a single set of powers for the FSA. This will allow the
     regulator to authorise all those kinds of financial services
     business requiring regulation. It will have flexible powers to
     make rules governing regulated activities, subject to
     consultation and cost-benefit analysis. It will have full 
     powers, where necessary, to investigate and intervene in 
     authorised firms' activities and to discipline, including the 
     power to fine.

     powers for the Treasury to change the scope of what is
     regulated. For example, the Council of Mortgage Lenders' code of
     practice is to be reviewed in 1999. If required, it would be
     possible to make mortgages subject to regulation under the Bill.

     a new independent appeals tribunal. This will come under the
     Lord Chancellor's Department and will give and effective right
     of appeal for those affected by the FSA's decision.

     single ombudsman and compensation schemes to ensure improved
     access for consumers by providing single points of entry and
     improved public profile. This will reduce the scope for
     confusion about the roles and responsibilities of different
     schemes.

     a new regime to regulate financial promotion. The draft Bill
     includes a single framework to cover existing activities such as
     issuing advertisements and making unsolicited 'cold calls',
     taking account of changes in technology.

     new civil fines for market abuse which will fill a gap in the
     current framework and will complement, not replace, the criminal
     regime.

     the recognition of investment exchanges and clearing houses. The
     FSA will continue to be able to recognise the status of such
     bodies.

     statutory oversight of Lloyd's. New FSA powers will provide, for
     the first time in many areas, a major element of external
     regulatory accountability.



NOTES TO EDITORS

1.   The public consultation period ends on 30 October 1998.

2.   Media copies of the bill and consultation document are available
     from the Treasury Press Office on 0171 270 5185.

3.   Copies are available, free of charge, by telephoning 0191 215
     0110.

4.   Comments on the Bill should be sent to Regulatory Reform Team,
     Room 55A/G, HM Treasury, Parliament Street, London, SW1P 3AG or
     via the Internet to fsm.bill@hm-treasury.gov.uk

5.   If you have access to the Internet, you can find this news
     release and other Treasury material at
     http://www.hm-treasury.gov.uk

# = pounds sterling